14 January 2019 Weekly Analysis
GCMAsia Weekly Report: January 14 – January 18
Market Review (Forex): January 7 – January 11
US Dollar
The US dollar dipped and closed lower at 95.20 last Friday as dollar’s market sentiment exacerbated amid mixed data been announced throughout the week.
During early of the week, the announcement of poor ISM Non-Manufacturing PMI data dragged down the trader’s fascination towards the currency. According to Institute for Supply Management, the data came in at 57.6, missing the economists forecast of 59.6. The data has restricted overall bullish momentum of the greenback. Hence, majority reacted to such downbeat data by selling off the Greenback and shifted their investment to other currencies such as GBP and EUR. Besides, a progress in trade dispute between China and United States also further worsen the dollar’s performance, global market sentiment bolstered and investor started to seek for riskier asset. Late last week, a dovish note from Federal Reserve Chairman Jerome Powell continued to pull down the dollar as he commented that a pause on hiking interest rate would be made if the inflation remain steady in this year. However, the CPI data that released on last Friday managed to recover the value of Greenback as the data came in as what economist forecast, at a rate of 0.2%.
Overall, market participants are still remained cautious toward the greenback while they look ahead to Tuesday’ data on US producer price inflation to gauge the next step of Federal Reserve’s decision.
USD/JPY
USDJPY stopped its downward trend and traded steadily around 108.55 throughout the entire last week. Early of the week, a subdued in demand of safe haven asset stifled the yen after the crucial data released from US showed that the US current economy growth started to slowdown. Thus, investor shifted their portfolio to safer asset such as Yen and gold. After hitting a high level of 109.00, the pair of USD/JPY retraced after dollar market made a great come back, where its CPI data came in at a rate that same as economist ‘s forecasts.
EUR/USD
EURUSD strengthen throughout the week amid upbeat data and a dovish comment from Fed while closing the week at 1.1470. Early last week, European Zone has announced several crucial data included Retail Sales data and German Industrial Production data. Fortunately, all of the data shown a higher than expected reading and it boosted up the demand of Euro against other currencies. The upbeat data portrayed that the European Zone economy outlook growth is still on track and an interest rate hike by European Central Bank (ECB) is anticipated.
Besides, as Euro currency movements were more subject to Dollar movement, the dollar’s decline due to possibility of pause on tightening monetary policy led to a rise in Euro.
GBP/USD
GBPUSD skyrocketed throughout the week and hit the highest level in six weeks at 1.2860 while closing at 1.2840 last Friday. Last week, Sterling pound was lifted up by the outperform GDP data where the data came in at 0.2%, comparing to 0.1% of economist’ forecast while it portraying that the economy health of British is still strong. However, market participants are now keeping their eyes on the coming parliamentary vote on Brexit deal.
Market Review (Commodities): January 7 – January 11
GOLD
Gold price continued its appreciation while closing last week’s market at $1287.25 per ounce following US mixed data and dovish note from Federal Reserve chair Jerome Powell. The uncertainty in market outlook and a potential political turmoil in the US has encouraged investors to shed away from riskier market and bid into safe haven market such as yen and gold.
Overall, gold price is still on track to extend its upward trend due to uncertainty in global outlook and US political issues such as US government shut down enter to 22nd days due to Mexico border wall conundrum.
Crude Oil
Crude oil is still on track of its bullish trend while closing last week’s market at 51.70 amid sentiment of oil market turned positive, supported by OPEC oil production cut.
Last week, crude oil price was traded higher amid the commodity received stronger bullish support due to higher optimism for a trade war resolution between US and China. Besides that, sentiment was also further boosted up after EIA crude oil inventories data shown a decline in US barrel count as it assuage market participants’ concerns upon market supply glut.
Overall, crude oil is on the track of recovering from prior losses while market participants will still place their attention upon the upcoming inventories data in order to get an assurance on whether OPEC’s oil production cut plan able to limits the downside of the commodity price.
Weekly Outlook: January 14 – January 18
For the week ahead, investors will focus on various data such as the highly anticipated Producer Price Index (PPI) and Retail Sales data which will provide a clearer outlook on current US economic condition and future prospect.
As for oil traders, they will be eyeing on US inventories level reported by API and EIA to gauge the strength of crude demand for world’s largest oil consumer.
Highlighted economy data and events for the week: January 14 – 18
| Monday, January 14 |
Data CNY – Trade Balance (USD)(Dec) Events USD – Fed Chair Powell Testifies
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| Tuesday, January 15 | Data
EUR – Trade Balance (Nov) USD – PPI (MoM) (Dec) Events GBP – UK Parliament vote on Brexit deal
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| Wednesday, January 16 |
Data USD – API Weekly Crude Oil Stock EUR – German CPI(MoM)(Dec) GBP – CPI (YoY)(Dec) USD – Retail Sales(MoM)(Dec) USD – Crude Oil Inventories
Events N/A
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| Thursday, January 17 |
Data CNY – GDP(YoY)(Q4) EUR – CPI(YoY)(Dec) USD – Building Permits(Dec) USD – Goods Trade Balance (Nov) USD – Initial Jobless Claim USD – Philadelphia Fed Manufacturing Index (Jan) USD – New Home Sales Events USD – OPEC Monthly Report
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Friday, January 18
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Data CHF – PPI (MoM)(Dec) GBP – Retail Sales (MoM)(Dec) CAD – Core CPI (MoM)(Dec) USD – Industrial Production (MoM)(Dec) USD – Michigan Consumer Sentiment (Jan) USD – U.S. Baker Hughes Oil Rig Count
Events USD – IEA Monthly Report USD – OPEC Meeting
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